The first two productions in English National Opera's Ring cycle were characterised by their attempts to ground Wagner's tetralogy in modern life. It was an approach that became less and less convincing, and reached its nadir in the final scene of The Valkyrie, when one of the great endings in opera was made utterly trite.

In Siegfried, however, almost every component in the new staging improves hugely on what has gone before (with one significant exception: Robert Hayward's Wanderer is as disappointing as his Wotan in the earlier operas). There is perception and dramatic point to Phyllida Lloyd's direction, and beauty and resonance in Richard Hudson's sets, while Paul Daniel's conducting seems to have a more confident measure of the music's pacing; the orchestral playing is first rate.

It is clear that Lloyd's view of the Ring is never going to have an epic dimension. Her approach remains unapologetically reductive, determined to find modern equivalents for Wagner's imagery. In Siegfried, though, she and Hudson have come up with a far more pertinent set of images than before; they enhance and tease out strands in the drama rather than negate them. It may not be a new idea to depict Mime's hut as a grubby kitchen, but everything here is carefully observed, from the bunk beds to the leatherette settee.

The design is given credibility by the confrontations between John Graham-Hall's beautifully realised Mime, a crisply sung bundle of neuroses and incompetent cunning, and Richard Berkeley-Steele's astonishingly youthful Siegfried, tousle-haired and baseball-capped. In all he does, Berkeley-Steele is every inch the ebullient, unthinking adolescent. His forging scene is less about muscle than magic: he kneads the sword shards together Uri Geller-style, and fashions the new one to an accompaniment of incantation and disco music.

Fafner's lair lies behind a door in a forest, beautifully coloured and lit; Alberich (the commanding Andrew Shore) waits patiently outside with the infant Hagen (presumably) in a carry-cot beside him. The Woodbird (the excellently lucid Sarah Tynan) is a teenager on a scooter.

The opening of the third act is a wonderfully potent invention, too: when the Wanderer seeks out Erda (the rich-toned, wonderfully eloquent Patricia Bardon), he finds her in a retirement home, watching television with a trio of equally elderly ladies. Those other inmates are unmistakably the Three Norns, and what they watch on TV is a sea of flame that could be the magic fire guarding Brünnhilde or, equally, the conflagration that will bring the end of the world. The scene ends with Siegfried and the Wanderer throwing the old ladies out of their chairs; they are left to stare into the void while the orchestral interlude unfolds. Siegfried goes off to find Brünnhilde more or less where she had been left by Wotan in The Valkyrie, but without the distracting gaggle of paparazzi and admirers.

The love scene that follows is thoroughly credible: Berkeley-Steele husbands his vocal resources intelligently and keeps plenty in reserve for the final moments, while Kathleen Broderick is a wonderfully lithe heroine, even if the vocal lines sometimes test her to the limit. By this time, Daniel's conducting has a strong sense of dramatic purpose, too, even though a sense of line is still not one of its strengths. Now, the completion of the cycle with The Twilight of the Gods next April seems like something worth waiting for.